Mileage rates for nannies using their own cars for work

[PinkFondantFancy]

How much mileage do people typically pay their nannies? Nannytax suggests 45p a mile which seems like a lot to me - it's a lot more than I get!!

I'm a cm and the inland revenue say I can claim 45 pence per mile for business expenses, so I would say nanny tax is correct. It's for petrol/general wear and tear on the car etc.

Nannies know this and won't accept less.

Yes - always paid 45p - standard for nannies in our area.

I get 45p. Keep in mind that nanny needs a car maintained to a suitable standard, you don't want them driving your children around in a rust bucket. They need suitable insurance. They will be driving around during their own non-mileage paid time with equipment for work, such as car seats, possibly other things as well, so are carrying extra weight they would not need to carry if they didn't transport your children.

Whilst fuel may be 12p per mile, it's the cost of maintenance, insurance, and buying the car itself which are the big costs I feel. If you look at it that way, does 45p cover it?

See how it goes. All trips must be logged for mileage claim, so you can see over time what trips are made and if necessary put restrictions on where nanny goes.

On your budget, what figure have you estimated for annual mileage? Depending on your location it could well be £1000+
Mileage up to 10,000 miles per year is non taxable, as long as it is paid at 45p or less.

If you decide to pay less, make that clear now and be prepared for the nanny not to accept the job.

Fantastic, thanks all for coming back to me. Not a problem to pay 45p, just weighing up whether better off doing that or providing a car but think still better off paying expenses. As you say, it's important that the nanny has a good car. 45p a mile is still a heap cheaper than the bus!!

Guess it is probably cheaper than providing a car.

Talking of car costs, make sure nanny can park at/near your home. Parking permits can be hard to obtain for a nanny, as they are not a resident.

As far as I'm aware, that's not quite what the IR say Maryann.

They say you can receive up to a maximum amount per mile without having to pay any tax, that amount being the approved mileage allowance payment (AMAP), which is currently 45p per mile for the first 10,000 business miles in the year, and 25p per mile for any mileage over 10,000.

In saying that the IR are not saying you can't receive more than 45p per mile, but if you do you will have to pay tax on the excess over 45p per mile.

Nor are the IR saying you can't receive less that 45p per mile and, in fact, if you do you can get tax relief, mileage allowance relief (MAR), against your earnings for the difference.

As to what the usual or average mileage allowance paid to nannies might be? I haven't a clue!

The average price is 45p per mile and nannies know this and won't except less.

The average price is 45p per mile and nannies know this and won't except less

Why? given this

if you do (receive less that 45p per mile) you can get tax relief, mileage allowance relief (MAR), against your earnings for the difference

Maybe a lower rate per mile + tax relief on the difference + (because employer paying a lower milage rate) an alternative working perk, the absence of which wouldn't have attracted tax relief, would be the cunning way to go? I'm all for tax relief.

So if someone got 25p per mile, how much tax relief would they get?

As I understand it you're not better off...

45p allowance less 25p paid leaves 20p to claim tax relief of.

Assuming 20% tax bracket, 20% of 20p is 4p of relief which can be claimed.

It's just easier for nannies to get their mileage reimbursed as they do it, which is why they quote the maximum figure and expect that.

So if someone got 25p per mile, how much tax relief would they get?

As chocoshopoholic says it would be tax relief on the 20p difference, so in the lower tax bracket is indeed just 4p per mile, which is why I thought it might be useful to do if the employer was going to offer an alternative working perk, to make up for paying a lower milage rate.

Adishbesteatencold - the rules you're quoting apply to employees, not to self-employed childminders. Self employed people can charge whatever they want to their customers, and can deduct 45p per mile for business mileage off their profits

Wonder what the perk would be... if nanny was doing say 3000 miles a year and getting 25p, plus 4p tax relief, then

45p x 3000 = £1350
29p x 3000 = £870
So the perk will need to be valued at £480 a year at least... and that is the value the nanny needs to feel the perk is worth, not what the actual perk costs to provide.

A perk like Health club membership could cost over £1000 but the nanny may not use it that much and so the perk is not worth much to them.

You can go onto the aa or rac and put in makr of car, engine size etc and get an actual figure for running costs. The hmrc figure is just about tax rules, not the actual mileage cost which could be a lot cheaper.

Though the AA figure for a small car doing under 5000 miles a year, is 68.65p per mile.
Rate goes down if the car is used more... which it may well be used more but that other use is personal, not work related.

If a parent was buying a nanny a car to use for work and it was not used at other times, then the cost according to the AA would be at least 68.65p per mile (if doing 5000 miles a year, a nanny will probably do less than that).

So shouldn't the cost of the parents providing a car be taken into account, rather than what it actually costs the nanny to drive their own car (combining work and pleasure)?

Yes, ceeveebee I was indeed talking about rules that apply to employees, (Nannies, in fact, as per the OP) which was why I referred to their employer offering perks, but of course you are right, the rules applied to self-employed people re allowable motor expenses can be calculated by deducting the fixed mileage rates (currently the same as the AMAP rates) from gross profit.

Sorry if I was being confusing!

That is so weird, nannynick, a Health Club membership was exactly the perk that was running through my mind, when I wrote that! My cousin was given a Health Club membership as part of her employment package (she was given the choice) and, to her, that really was a perk!